Michael E. MooreExecutive Director

NACCSA

VP Energy Commodities and Advisory ServicesFearnOil, Inc. a division of Astrup-Fearnleys

November 6, 2014 GCCSI Annual Meeting-Abu Dhabi

“Regional Perspectives on CO2-EOR: The US”

North American Carbon Capture Storage Association

NACCSA Participants• American Petroleum Institute • Anadarko Petroleum Corporation• BP Alternative Energy North America Inc.• C12 Energy• Denbury Resources, Inc.• Kinder Morgan• Occidental Petroleum Corporation• Peabody Energy• Sasol• Schlumberger Carbon Services• Shell

Affiliated participants• SSEB-Ken Nemeth• WRI-Sarah Forbes• EERC-John Harju• IEA CCS –Sean McCoy

• The Astrup Fearnley group represents over a century of history, growth and excellence in the area of shipping services. This fascinating legacy is a success story created by generation after generation of the Astrup Fearnley family. We believe it is a story worth telling.

• Fearnleys traces its history back to the year 1869 when its founder, Thomas Fearnley, established a shipbroking and agency business in Christiania, as the city of Oslo was known in those days. The little company soon prospered and engaged in, among others, the trade in lumber, wine, pitch and ice.

• In connection with its trading activities the company bought shares in vessels and chartered vessels. Although the company began by chartering sailing vessels, by 1880 the age of the steamship had clearly begun. By 1881 the partnership of Fearnley & Eger established the Christiania Steamship Company which contracted two newbuildings at the the Kockums Shipyard in Malmø, the 1235 deadweight ‘Oslo’ and the 1215 deadweight ‘Bygdøy’.

• By the end of the 1880s the company had contracted a further six units. In the beginning of the 1900s Fearnley & Eger became, more or less, a shipowning company and invested in ever larger units. The company engaged in both liner and tramp activities and survived the two world wars. In addition to these shipowning activities, the firm continued to engage in developing its skills in the area of shipping services and was engaged primarily in the area of dry cargo shipbroking. As the tanker industry started to develop at the beginning of the 20th century, Fearnleys became enthusiastically involved in this new field of endeavour. Later on, when the transportation of gas by sea became an important area of commerce, Fearnleys developed a broking department which specialized in this new commodity. All in all, the history of the company has been closely focused on the concept of innovation; whenever new ideas and new industries developed which required seaborne transportation, Fearnleys was quickly on the scene.

• As the 20th century progressed, the need for brokerage services for the transportation industry became so great that Fearnleys began to develop these (along with related ancillary services) as its principal business area. Always on the cutting edge of new trends, the company became involved in car carrier transportation in the 1960s, offshore and rig broking in the 1970s, coinciding with the onset of the development of the Norwegian continental shelf offshore oil fields, and energy trading and financial services in the 1980s. Fearnleys was also a pioneer in the development of transportation industry research and consultancy services, and has been involved in monitoring and analysing shipping markets since the early 1960s when Fearnresearch was first established. Now at the dawn of the 21st century the little company which started in Christiania in 1869 is firmly established in every corner of the world and assumes a global perspective on transportation much to the benefit of its worldwide customer base.

US Coal ResourcesSource: http://pubs.usgs.gov/of/1996/of96-092/Comp/main.gif

Coal Utilization

CO2

Above picture source: The CURC-EPRI Tech Roadmap pg. 24

CO2 Utilization

Source: www.netl.doe.gov/research/coal/carbon-storage/research-and-development/co2-utilization

Source: The CO2-EOR Oil Recovery and CO2 Utilization “Prize”. Prepared for: Global Technology Exchange Session: Subsurface and EOR Task Area Challenge Prepared By: Mr. Vello A. Kuuskraa, CEO, Advanced Resources International, Inc. April 2014

9

Size of the CO2-EOR Prize• Note: Current

work is going on to quantify the areas NOT below oilfield – but rather in the fairways-or “greenfields”.

• A study expected out this winter covers only four counties in Texas—estimates are 100 billion bbls of OOIP additional oil not in previous studies of the ROZ.

• Catch is: Need CO2 to produce the oil..

Chart Source: Kuuskraa 4-2014 GOTIA Presentation

Residual Oil Zone (“ROZ”)

11

Next Frontier for CO2-EOR -- Shale Oil/Bakken---and Globally?

Source: EERC presentations 2014

US Shale Plays - Unconventional Oil &Gas

CO2 Supply

Appendix C: Existing CO2 Transport Infrastructure in the United States

• Extensive networks of pipelines already exist around the world. In the US alone, there are about 800,000 km of natural gas and hazardous liquid pipelines, and 3.5 million km of natural gas distribution lines.

• Some 6,500 km of pipelines actively transport CO2 today. In the US, around 50 CO2 pipelines are currently operating, which transport approximately 68 Mtpa of CO2. These onshore pipelines cross six provincial/state boundaries and one international border (into Canada). Much of the existing CO2 pipeline infrastructure in the US was built in the 1980s and 1990s and delivers mainly naturally sourced CO2 for EOR purposes.

• See Appendix for listing of each individual CO2 pipeline for details.• http://

decarboni.se/publications/global-status-ccs-2014/appendix-c-existing-co2-transport-infrastructure-united-states

• See section 8.2 page 118 “CO2 Transportation-Status and New Developments” for more details on projects, volumes and pipelines.

• All located in Global CCS Institute’s “Global CCS Status-2014”

Annual US CO2-EOR production

Source: “Near-Term Projections of CO2 Utilization for Enhanced Oil Recovery” 5/7/2014 http://netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/Near-Term-Projections-CO2-EOR_april_10_2014.pdf

Projected US Utilization and Storage of Natural and Anthropogenic CO2 with EOR

Source: “Near-Term Projections of CO2 Utilization for Enhanced Oil Recovery” 5/7/2014 http://netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/Near-Term-Projections-CO2-EOR_april_10_2014.pdf

Projected US Utilization and Storage of Natural and Anthropogenic CO2 with EOR

Source: “Near-Term Projections of CO2 Utilization for Enhanced Oil Recovery” 5/7/2014 http://netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/Near-Term-Projections-CO2-EOR_april_10_2014.pdf

US CCUS Projects

Mississippi Power Kemper IGCC Projecthttp://www.mississippipower.com/kemper/docs/Q4_2013KemperProgressReport.pdf

• 582-megawatt integrated gasification combined-cycle (IGCC) power plant in Kemper County monetizing lignite

• Nearly complete-largest commercial scale CCUS power project in the US

• CO2 going to Denbury and Tellus for EOR and utilization• Power block is operational and running delivering power to the gridhttp://mississippipowernews.com/2014/09/15/un-climate-official-c

alls-kemper-hope-for-future/

NRG/Petra Nova WA Parish Carbon Capture Utilization Project

• Company/Alliance: Petra Nova Holdings: a 50/50 partnership between NRG Energy and JX Nippon Oil & Gas Exploration Corp.

• Location: Unit 8, W.A. Parish plant, Thompsons, 60KM from Houston, Texas, USA

• Feedstock: Coal• Size: 250 MW slip stream from 610 MW unit. • Capture: 1.4 Mt of CO2 captured annually (90%

capture)• Capture Technology: Post-combustion: KM-CDR

amine scrubbing CO2 developed by MHI and KEPCO• CO2 Fate: 82 mile pipeline for onshore EOR in the

West Ranch Oil Field in Jackson County, Texas • Timing: Project is scheduled to start at the end of

2016• http://

sequestration.mit.edu/tools/projects/wa_parish.html www.nrg.com/sustainability/strategy/enhance-generation/carbon-capture/wa-parish-ccs-project/

Air Products Texas Carbon Capture Demonstration Project

• Port Arthur Fact Sheet: Carbon Dioxide Capture and Storage Project

• Company/Alliance: Air Products and Chemicals, Denbury Onshore LLC, University of Texas Bureau of Economic Geology and Valero Energy Corporation

• Location: Port Arthur, Texas, US• Start Date: January 2013• End Date: September 2015• Size: 1 Mt/yr • Capture Type: Post-combustion (90% capture)

using vacuum swing adsorption technology• CO2 Source: Existing steam-methane

reformers • Storage: EOR in West Hasting's and Oyster

Bayou oil fields, Texas• https://

sequestration.mit.edu/tools/projects/port_arthur.html

Summit’s Texas Clean Energy Project• Company/Alliance: Summit Power Group

Inc, Siemens, Fluor, Linde, R.W. Beck, Blue Source and Texas Bureau of Economic Geology –Chinese Partners TBA

• Location: Penwell, Ector County, Texas, USA

• Feedstock: Coal • Size: 400 MW Gross, 245 MW

Commercial output ( 2-3 Mt/yr captured)• Capture Technology: Pre-Combustion:

Siemens IGCC technology and Linde Rectisol acid-gas capture technology (90% CO2 capture)

• CO2 Fate: EOR in the Permian Basin • Start: Construction should start early

2015• Operational-TBA• http

://sequestration.mit.edu/tools/projects/tcep.html

• http://www.texascleanenergyproject.com/project/

North Dakota Vision “EPIC”:Lignite Gasification, Power Generation and CO2-EOR-

in Shale and Conventional

Other Considerations

Norwegian Visit to Navajo Nation• Dr. Jostein added that Norway has

a strong interest in working with the Navajo Nation and hopes to aid in the development of a more efficient avenue of clean coal burning,...

• One of those techniques is an Integrated Gasification Combine Cycle Power Generation Unit, which would utilize coal and preserve remaining resources acquired from the purchase of Navajo Mine from BHP Billiton near Farmington, NM.

• Note: Captured CO2 would move to the Permian Basin for EOR.

CO2 and Methane Hydrates• Data from Innovative Methane Hydrate Test on Alaska's North Slope Now

Available on NETL Website. March 11, 2013 • Data from an innovative test conducted last year that used carbon dioxide (CO2)

and nitrogen (N2) injection to release natural gas from methane hydrates at a well on the Alaska North Slope is now available to researchers and the public on the National Energy Technology Laboratory (NETL) website.

• NETL, the research laboratory of DOE’s Office of Fossil Energy (FE), participated in gas hydrate field production trials in early 2012 in partnership with ConocoPhillips and the Japan Oil, Gas and Metals National Corp. (JOGMEC). This test well (known as Iġnik Sikumi, Inupiat for “Fire in the Ice”) represented the first test of a CO2 exchange technology that was developed by ConocoPhillips and the University of Bergen, Norway. In the test, a small volume of CO2 and nitrogen was injected into the well and then the well was produced back to demonstrate that this mixture of injected gases could promote production of natural gas.

• http://energy.gov/fe/articles/data-innovative-methane-hydrate-test-alaskas-north-slope-now

US Becomes World Scale LPG and Ethane Exporter-(and Backhaul CO2?)

• GPA ’14: US exports of LPG poised to skyrocket. 4-15-14

• A near-doubling of US propane exports occurred from 2012 to 2013. This paradigm shift looks likely to continue.

• At least 77 projects to build or expand LPG processing capacity are in the works, Ms. Anderson said. These projects will bring online 13 billion cubic feet per day (Bcfd) of additional capacity in US by the end of 2015.

• Bentek anticipates US LPG supply from gas plants to reach 2 MMbpd by 2019

• http://www.hydrocarbonprocessing.com/Article/3331124/GPA-14-US-exports-of-LPG-poised-to-skyrocket.html

• Enterprise Building Ethane Export Terminal to Cut Glut . 4-22-14

• The operator of the largest U.S. storage hub for natural gas liquids, plans to reduce an oversupply of ethane by exporting the plastics ingredient from the Texas coast.

• The refrigerated export facility is expected to begin operating in the third quarter of 2016.

• It will have the capacity to load 240,000 barrels a day, making it the largest such facility in the world, the company said.

• U.S. ethane supply currently exceeds demand by about 300,000 barrels a day, a figure that may reach 700,000 barrels by 2020.

• http://www.bloomberg.com/news/2014-04-22/enterprise-building-ethane-export-terminal-to-cut-glut.html

US Carbon Markets and CCUS/CO2-EORPossible Role under Proposed EPA Regs

• PEW/C2ES CCS Protocols-released 2012

• ACR CCS CO2-EOR Offsets-final stages of review

http://www.c2es.org/docUploads/CCS-framework.pdf

Significant Carbon Events

• November 7th 2013'Unburnable' carbon fuels investment concerns-Investors group with €7.3tn of assets asks energy giants about their exposure and response to the risk of falling demand for oil and coal. http://www.theguardian.com/sustainable-business/unburnable-carbon-investment-agenda

• June 12th 2013 President Obama quietly raises 'Carbon Price' as costs to deal with climate changes increase. The increase of the so-called social cost of carbon, to $38 a metric ton in 2015 from $23.80, adjusts the calculation the government uses to weigh costs and benefits of proposed regulations. The figure is meant to approximate losses from global warming such as flood damage and diminished crops. http://www.bloomberg.com/news/2013-06-12/tougher-regulations-seen-from-obama-change-in-carbon-cost.html

Questions & Thank You!Michael E. Moore

• VP Energy Commodities and Advisory Services • FearnOil Inc. (a division of Astrup-Fearnleys)• www.fearnleys.com

• Executive Director• North American Carbon Capture Storage Association• www.naccsa.org

• mmoore@fearnoil.com Tel: 281-759-0245

Map of Basins with assessed Shale Oil and Shale Gas Formations, as of May 2013

Source: Technically Re coverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States EIA June 13th 2013

Major Shale (Gas/Oil) Basin Wells Rapid Declining Production Curve

US and CCUS Policy Shift

As a follow on to DOE Chuck McConnell’s CCUS move driven by the value proposition of CO2-EOR in 2011, Atlantic Council issued its Policy Brief on US CCUS in 2012

www.atlanticcouncil.org/publications/issue-briefs/us-policy-shift-to-carbon-capture-utilization-and-storage

Current CCS/CCUS Legislation that Pertains to CO2-EOR

• Senator Rockefeller. May 6 2014 introduced two bills — the “Carbon Capture and Sequestration Deployment Act of 2014” and the “Expanding Carbon Capture through Enhanced Oil Recovery Act of 2014” www.timeswv.com/westvirginia/x360419567/Rockefeller-introduces-carbon-capture-bills — that would invest in federal carbon capture and sequestration (CCS) research and development; expand tax credits for innovative companies investing in CCS technologies; create loan guarantees for construction of new CCS facilities, and retrofits of existing facilities that utilize CCS, among other provisions

• Carbon Capture & Sequestration Innovation Program• Modification to the Carbon Dioxide Sequestration

Credit (45Q)• Carbon Capture & Sequestration Tax Credits and

Loan Guarantees• Expanding the 45Q Tax Credit• Reforming the 45Q Tax Credit www.neori.org/NEORI_45Q.pdf

Note: This legislation is a result of the NEORI 45(Q) recommendations

Current CCS/CCUS Legislation• Senator Heitkamp’s March 24th 2014 “Advanced Clean Coal Technology Investment in Our

Nation (ACCTION)” Bill www.heitkamp.senate.gov/public/_cache/files/de7bf292-1fcb-4639-b592-6670b57d824b/one-pager.pdf

• Developing large-scale carbon storage programs to support the commercial-scale application of enhanced oil recovery and geologic storage of carbon dioxide.

• Increasing the accessibility of funds in existing federal programs by 1) directing 25% ($2 billion) of the current U.S. Department of Energy (DOE) Loan Guarantee Program funding for fossil energy to go to coal projects, 2) enabling eligible projects to receive DOE loan guarantees even if they have received another source of federal assistance, and 3) streamlining the process for companies to receive federal funds for which they have qualified.

• Revamping the existing R&D programs for advanced coal, and carbon capture and sequestration technologies by including transformational coal-related technologies, a cost share program, and incremental funding levels consistent with technology goals until 2035.

• Increasing the current tax credit for carbon sequestration from coal facilities to 30% and including polygeneration facilities among the possible eligible projects.

• Creating a variable price support for companies that capture CO2 to provide long-term certainty to the utilities that sell CO2 for enhanced oil and gas recovery, regardless of the price of oil.

• Creating clean energy coal bonds to provide tax credits for coal-powered facilities that sequester CO2 or meet efficiency targets relative to the current coal fleet.

• Requiring reports to Congress from the DOE on the economic and technical status of CCS research and projects, including an evaluation of CCS projects online in Canada and a recommendation of how the U.S. could undertake similar projects with public-private collaboration.

ISO-CCS Standards for Geologic Storage

• International Organization for Standardization (ISO) Technical Committee TC-265

• Title: Carbon dioxide capture, transportation, and geological storage-includes CO2-EOR

• Acceptance of Z-741 by Standards Council of Canada and American National Standards Institute (ANSI) is “seed document” for TC-265

• 26 countries participating and NGOs

International Standards Organization - 31000, 17024, 14064, 14065

International Performance Assessment Centre for Geologic Storage of CO2 – Seed document

Canadian Standards Association - ISO Secretariat, standards developer

Bi-national agreement between USA & Canada

Indiana Department of Environmental Management (IDEM) issued a final PSD/Title V permit to Indiana Gasification, LLC in Rockport, IN

Comments by NACCSA General Counsel Kipp Coddington

• Fourth, IDEM, also in the response to public comments document, rejected arguments that the permit had to somehow include downstream controls on EOR to ensure sequestration: “[C]omments that related to the control of CO2 downstream of the proposed facility (e.g., control of CO2 during transportation, storage, use, and re-use in EOR operations) are not relevant for this permitting action.” Id. p. 21.

• Fifth, IDEM rejected suggestions that the facility be required to conduct non-EOR sequestration. NGOs argued, for example, that work done by the Midwest Geological Sequestration Consortium, coupled with the ADM project and others, suggest that CCS has been “clearly demonstrated” as an available sequestration technology. Id. p. 23. IDEM, in contrast, took the position that CCS was technically infeasible on various grounds. Id. p. 25.

• Sixth, IDEM deflected suggestions that UIC Class II was inadequate, with one commenter suggesting that only UIC Class VI is appropriate. Id. pp. 28-30. As above, IDEM viewed any discussion of UIC class as irrelevant in this scenario